Free Business Sale Agreement Template

DEFINITIONS AND INTERPRETATION

In this Agreement, unless the context otherwise requires:

"Assets" means all assets of the Business sold to the Buyer pursuant to this Agreement, as described in clause 2.
"Business" means the business known as Hargreaves Precision Engineering (Manufacture and supply of precision engineered components for the automotive and aerospace sectors) carried on by the Seller at Unit 7, Attercliffe Industrial Estate, Sheffield, S9 3WG.
"Business Day" means a day other than a Saturday, Sunday or public holiday in England and Wales.
"Completion" means completion of the sale and purchase of the Business in accordance with clause 7.
"Completion Date" means 2026-04-30 or such other date as the parties may agree in writing.
"Disclosure Letter" means any letter of the same date as this Agreement from the Seller to the Buyer qualifying the Warranties.
"Goodwill" means the goodwill of the Business together with the exclusive right of the Buyer to represent itself as carrying on the Business in succession to the Seller.
"TUPE" means the Transfer of Undertakings (Protection of Employment) Regulations 2006.
"Warranties" means the representations and warranties given by the Seller in clause 8.

SALE AND PURCHASE

Subject to the terms of this Agreement, the Seller shall sell with full title guarantee, and the Buyer shall purchase, the Business as a going concern on the Completion Date.

The sale includes all Assets of the Business, including without limitation: Goodwill; all plant, machinery, tools and equipment; all stock-in-trade and work-in-progress; the benefit (subject to the burden) of all trading contracts, customer orders and supplier arrangements; all intellectual property rights used in the Business (including trade marks, domain names, software, know-how and confidential information); all books of account, records and data (subject to clause 10 on data protection); and the benefit of all licences, permits and consents held for the purpose of the Business, so far as they are assignable.

Liabilities: Except as expressly assumed by the Buyer under this Agreement, the Seller shall retain and remain solely liable for all debts, liabilities and obligations of the Business (of whatever nature, whether actual, contingent, known or unknown) accrued, incurred or arising on or before the Completion Date.

PURCHASE PRICE AND PAYMENT

The purchase price payable by the Buyer to the Seller for the Business is £750,000.00 (the "Purchase Price"), exclusive of VAT (if any).

A deposit of £75,000.00 shall be paid to the Seller's solicitors as stakeholders on exchange of this Agreement, with the balance of £675,000.00 payable on the Completion Date.

Price allocation: The parties agree the following apportionment of the Purchase Price (for tax and SDLT purposes): Goodwill £500,000; plant and equipment £150,000; stock £75,000; IP £25,000.

VAT AND TAX TREATMENT

VAT — Transfer of a Going Concern (TOGC): The parties intend that the sale of the Business should be treated as neither a supply of goods nor a supply of services for VAT purposes, being the transfer of a going concern within the meaning of section 49 of the Value Added Tax Act 1994 and article 5 of the Value Added Tax (Special Provisions) Order 1995. The Buyer warrants that: (i) it is, or will be immediately before Completion, a taxable person duly registered for VAT; (ii) it intends to use the Assets in carrying on the same kind of business as the Seller; and (iii) it has made any necessary option to tax under paragraph 2 Schedule 10 VATA 1994 in respect of any land transferred.

STOCK

The stock of the Business shall be subject to a physical stock count and valuation at cost (or net realisable value if lower) jointly carried out by the parties (or their nominated stocktakers) on the Completion Date. The agreed stock value shall be paid by the Buyer as an adjustment to the Purchase Price within five (5) Business Days of agreement.

EMPLOYEES AND TUPE

The sale of the Business constitutes a "relevant transfer" within the meaning of regulation 3 of the Transfer of Undertakings (Protection of Employment) Regulations 2006 ("TUPE"). On the Completion Date, the contracts of employment of all persons employed in the Business immediately before Completion shall, by operation of regulation 4 TUPE, transfer from the Seller to the Buyer on their existing terms and conditions (save for occupational pension rights within the meaning of regulation 10).

Information and consultation (reg 13): The Seller and Buyer each warrant that they have complied, and will continue to comply, with their obligations to inform and (where legally required) consult with appropriate representatives of any affected employees.

Employee Liability Information (reg 11): The Seller has provided the Buyer with the employee liability information required by regulation 11 TUPE not less than 28 days before the Completion Date, including identities, ages, statements of particulars, disciplinary/grievance records over 2 years and details of claims.

Mutual indemnities: The Seller indemnifies the Buyer against any liability (including claims under regs 4-7 TUPE, unfair dismissal, unlawful deduction of wages, redundancy pay and discrimination) arising out of any act, omission or event on or before the Completion Date. The Buyer indemnifies the Seller against any such liability arising after the Completion Date.

The Seller confirms there are 14 employees assigned to the Business as at the date of this Agreement.

COMPLETION

Completion shall take place on the Completion Date at such location (or remotely) as the parties may agree. On Completion:

The Seller shall: (a) deliver to the Buyer all documents of title and evidence of ownership relating to the Assets; (b) procure the execution of all assignments, novations, conveyances (including any TR1 if land is transferred) and other documents reasonably required to vest the Assets in the Buyer; (c) deliver possession of the Business premises and all keys, access codes, passwords and credentials; (d) deliver the books, records, customer and supplier data and all other items reasonably necessary for the conduct of the Business going forward; and (e) execute the Disclosure Letter (if any).

The Buyer shall: (a) pay the Purchase Price (or the balance thereof) in immediately available cleared funds; and (b) deliver the duly executed counterparts of all completion documents.

IP transfer: The Seller shall execute all necessary assignments to vest all intellectual property rights used in the Business in the Buyer, including trade mark assignments in Form TM16 and, where relevant, patent assignments under s.30 Patents Act 1977 and copyright assignments under s.90 CDPA 1988.

Contracts: The Seller shall use all reasonable endeavours to obtain, on or before Completion, the consent of all counterparties to any customer and supplier contracts requiring such consent for novation or assignment. Pending such consent, the Seller shall hold the benefit of any non-transferring contract on trust for the Buyer and shall account to the Buyer for all sums received.

Property: In relation to the Business premises, the Seller shall procure the assignment of the existing lease of the business premises to the Buyer, subject to any required landlord consent under the Landlord and Tenant Act 1988.

WARRANTIES AND LIMITATIONS

The Seller warrants and represents to the Buyer in the terms set out in this clause, subject only to matters fairly disclosed in the Disclosure Letter (if any). The Warranties are given as at the date of this Agreement and are deemed repeated immediately before Completion.

Core warranties (always given): (a) the Seller has full power and authority to enter into and perform this Agreement; (b) this Agreement constitutes legal, valid and binding obligations enforceable in accordance with its terms; (c) the Seller has good title to the Assets, which are free from all encumbrances; (d) the information disclosed by the Seller is true, accurate and not misleading in any material respect.

Full warranty suite: Standard warranties (e)-(h) above, plus: (i) the Seller owns or is duly licensed to use all intellectual property material to the Business and no third-party rights are infringed; (j) no contract is terminable or subject to renegotiation by reason of the sale; (k) no material undisclosed liabilities exist (whether actual, contingent or otherwise); (l) the Business is conducted in compliance with applicable environmental laws and no contamination or notice of breach subsists; (m) all licences, permits and consents necessary for the conduct of the Business are in full force and effect; (n) no bribery or corruption offence has been committed (Bribery Act 2010).

Claim period: Any claim for breach of the Warranties must be notified to the Seller in writing within 18 months from the Completion Date for general warranties and within seven (7) years for tax warranties (so as to dovetail with the HMRC assessment window).

Cap and de minimis: The aggregate liability of the Seller for breach of the Warranties shall not exceed 50% of the Purchase Price. Individual claims below £500.00 shall be disregarded, and the Seller shall have no liability until aggregate claims exceed £5,000.00 (at which point the whole amount shall be recoverable).

For the avoidance of doubt, nothing in this clause limits liability for fraud, fraudulent misrepresentation or fraudulent concealment, nor any statutory liability which cannot be excluded or limited at law.

TAX INDEMNITY

The Seller covenants with the Buyer to pay to the Buyer, on a pound-for-pound basis, an amount equal to any liability to taxation (including income tax, corporation tax, VAT, PAYE, Class 1 national insurance contributions, SDLT and any interest, penalties or surcharges) arising in respect of the Business prior to, or in respect of an event occurring on or before, the Completion Date.

This indemnity shall survive Completion and is not subject to the monetary cap or de minimis thresholds applicable to the Warranties. The Buyer shall promptly notify the Seller of any tax claim and shall permit the Seller, at the Seller's cost, to have conduct of the defence thereof.

DISCLOSURE LETTER

The Warranties are qualified by matters fairly disclosed in the Disclosure Letter. A matter shall only qualify the Warranties if it is disclosed with sufficient detail to enable the Buyer to identify the nature and scope of the matter disclosed. General disclosure of documents placed in the data room is not sufficient unless the relevance of the document to a specific Warranty is clearly indicated.

RETENTION

On Completion the Buyer shall withhold and pay into a joint solicitors' retention account an amount equal to 10% of the Purchase Price (the "Retention"). The Retention shall be held for twelve (12) months from the Completion Date (the "Retention Period") as security for any Warranty claims or tax indemnity claims by the Buyer.

On expiry of the Retention Period, the balance of the Retention (less any amount retained in respect of a notified but unsettled claim) shall be released to the Seller. Interest earned shall follow the principal sum.

RESTRICTIVE COVENANTS

The Seller covenants with the Buyer that (in order to protect the Goodwill of the Business transferred):

(a) Non-compete: for a period of two (2) years from the Completion Date, the Seller shall not, whether as principal, agent, partner, shareholder (otherwise than as a holder of not more than 3% of listed shares), director, employee or consultant, directly or indirectly carry on, be engaged in or concerned with any business which competes with the Business within a radius of 30 miles of the Business premises;

(b) Non-solicitation: for a period of two (2) years from the Completion Date, the Seller shall not solicit, canvass, entice or induce (or attempt to do so) (i) any customer of the Business as at Completion to cease doing business with the Buyer; (ii) any supplier of the Business; or (iii) any employee of the Business who transferred to the Buyer.

Each covenant is a separate and severable undertaking. The Seller acknowledges that the covenants are reasonable and necessary for the protection of the legitimate business interests of the Buyer in the Goodwill purchased, and are enforceable following Nordenfelt v Maxim Nordenfelt [1894] AC 535 and subsequent authorities.

HANDOVER AND TRANSITION ASSISTANCE

For a period of three (3) months following the Completion Date, the Seller shall, free of charge (save for reasonable out-of-pocket expenses pre-approved by the Buyer), provide the Buyer with such assistance as the Buyer may reasonably require to effect an orderly transition, including introductions to key customers and suppliers, training of the Buyer's staff and provision of operational information.

CONDITIONS PRECEDENT

Completion of this Agreement is conditional upon the following conditions precedent being satisfied (or waived by the Buyer in its absolute discretion) on or before the Completion Date: the assignment or grant of the lease of the Business premises being consented to in writing by the landlord (such consent not to be unreasonably withheld, having regard to s.1 Landlord and Tenant Act 1988).

Each party shall use all reasonable endeavours to satisfy the conditions as soon as reasonably practicable. If any condition is not satisfied (or waived) by the Completion Date (or such later date as the parties may agree), either party may terminate this Agreement without liability (save for any prior breach).

DATA PROTECTION

Each party shall comply with its obligations under the UK General Data Protection Regulation and the Data Protection Act 2018 in respect of any personal data (including customer, employee and supplier data) transferred in connection with the sale of the Business.

The Seller shall, before Completion, inform affected data subjects (or procure that they are informed) of the transfer of their personal data to the Buyer and the legal basis for such transfer under Article 6 UK GDPR (typically legitimate interests or, where required, consent). The parties shall cooperate in responding to any data subject rights requests (access, erasure, rectification) which concern both pre- and post-Completion activities.

INSOLVENCY AND ANTI-AVOIDANCE

The parties warrant and acknowledge that this Agreement is entered into in good faith, at arm's length, for proper business purposes and for full consideration. The Purchase Price represents the open-market value of the Business. The parties confirm that this Agreement is not intended as, and does not constitute, a transaction at an undervalue (s.238 Insolvency Act 1986), a preference (s.239 Insolvency Act 1986) or a transaction defrauding creditors (s.423 Insolvency Act 1986).

Companies Act s.190: Where the transaction is, or may be, a substantial property transaction with a director or connected person within the meaning of s.190 Companies Act 2006, the parties confirm that the transaction has been approved by ordinary resolution of the relevant company's members (or is not required to be so approved).

GOVERNING LAW AND GENERAL PROVISIONS

Governing law: This Agreement and any dispute or claim arising out of or in connection with it (including non-contractual disputes or claims) shall be governed by and construed in accordance with the law of England and Wales. The parties irrevocably submit to the exclusive jurisdiction of the courts of England and Wales.

Entire agreement: This Agreement, together with the Disclosure Letter (if any) and the schedules, constitutes the entire agreement between the parties and supersedes all prior drafts, negotiations, representations and understandings. Each party acknowledges that, in entering into this Agreement, it has not relied on any statement, representation or warranty other than those expressly set out herein (save in the case of fraud — Misrepresentation Act 1967 s.2(1) is not excluded).

Variation: No variation shall be effective unless in writing and signed by both parties.

Assignment: Neither party may assign or transfer any of its rights or obligations without the prior written consent of the other, save that the Buyer may assign to any member of its group.

Third-party rights: A person who is not a party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term, save as expressly provided.

Counterparts: This Agreement may be executed in any number of counterparts, each of which when executed shall constitute an original and together shall constitute one agreement.

Severability: If any provision is held invalid or unenforceable, the remainder shall continue in full force.